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08 December 2022 - Year XXVI
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FORUM of Shipping
and Logistics


The Marine Insurance Markets in 2003

2003 a better year for marine insurance
2004 a critical year
 


Hull and machinery
A sector still fragile
Europe
The Cargo market
War risks
The P&I Clubs
2004: a critical year


Luckily only a few major marine disasters occurred in 2003. Some companies have voluntarily or not left the marine insurance market but the underwriting capacity has been maintained. Movements in rates varied according to the different specific sectors of the marine market. On the other hand, risk exposure increased especially in value. 
 

Hull and machinery: rate hikes continued

In our report on the marine insurance for the year 2002, we mentioned that the market had firmed up, namely there was a follow-up of rate increases and a more selective assessment of risks. This trend continued during the first half of 2003, but the premium increases were far more moderate in the second half and at the beginning of 2004. 

Fleets which showed good technical performances at the beginning of 2003 met with increases of about 10 % on their hull and machinery policies, but sometimes as much as 25 to 50 % for some whose results showed a loss ratio in excess of 100 %, or alternatively for fleets which were terminating a long term contract and for which rates had been contractually limited during the firming up of the market since 2000. 

To the surprise of most marine insurance players, the revisions applied during the second half of 2003 were much more restrained, with the 'good' clients often obtaining less than 5 % increases, and underperforming ones being renewed at about 25 % over last done. 

Overall the performance of marine insurers improved thanks to the rise in rates, cost cutting, re-insurance costs remaining relatively stable, a stricter underwriting policy and an absence of major disasters as experienced in the last quarter of 2002. In the international market, the number of companies and underwriters is far fewer than 10 years ago. The capacity is divided out differently between companies with some subscribing a higher proportion of the risks, whilst others are far more sensitive and circumspect, which naturally produces different underwriting results and policies amongst companies. 

Despite an improvement in profits in 2003, the losses on the previous exercises did not allow some players to take full advantage of the improvement in premium rates and claims-record of the current exercise. The higher rates have not compensated the chronic under-charging of the last 6 years and many insurers have doubtless under-estimated the necessary reserves for covering the commitments taken during the previous years. 

These elements have without any doubt weakened the impact of the higher rates on results.
  

A sector still fragile

The weak recovery of the financial markets since December 2002 has affected the level of endowments for provisions against fundamental depreciation, with repercussions on the balance sheet and net profits of insurers. 

In 2003 the rating agencies gave a fairly general marking down on the financial standing of insurance companies.  

The reasons for these re-evaluations were not exclusively found in the marine sector, but also in the other segments of the insurance market. 

Standard & Poor's lowered the rating of 207 insurers and re-insurers in the course of 2003, namely 28 % more than in the previous exercise. This trend is symptomatic of the extent of the declining confidence in the solvency, which is affecting the majority of actors now since eighteen months. 

The need for technical returns is a criterion for the whole profession, as it is now no longer possible to fall back on the financial profits to subsidise as a general rule the technical deficits - which is a practice carried out in most European markets during the second half of the 90's. 

In practice, it should be realised that it is as much the impressive increase in freight rates (mainly in bulk and oil seaborne trade) as the important depreciation of the dollar in relation to the euro, which has led to a significant increase in the insured value of ships (mostly insured in dollars). Capital which is necessary to insure these ships is therefore considerably higher, but only results in very small increases in the insurance premiums. The effect of any total losses would therefore have a bigger negative impact on marine insurers.
 

Europe: a market leader and in competition with the developing markets

Marine insurance has remained an 'euro-centric' industry as 60 % of world business is underwritten in Europe, 22 % in Asia, 14 % in North America, and 4 % in the rest of the world. 

France (1) is number two world-wide in hulls underwriting and acts as an alternative and competitor to the London and Norwegian markets, who hold the predominant positions as leaders in the coverage of the largest international owner's fleets. The French marine insurance market is dominated by AXA Corporate Solutions and AMA (Allianz Marine & Aviation), with Groupama Transport completing the trio.

(1) Japan is in second place world-wide in terms of marine premium income, but it does not play a predominant role in the global scene, as the Japanese insurance companies are above all concentrated on the national shipyards and owners. Nonetheless they have recently shown a growing interest in the European fleet.

South Korea (Samsung Fire & Marine, Korean Re), like Japan, has introduced a change in policy in 2003 in proposing terms, which are often very competitive to certain European owners, especially Greek. 

A close watch should be kept over the viability of Asian companies in their expansionist drive, bearing in mind their last attempts at international underwriting in the 80's ended up in failure.
 

The Cargo market

The Cargo market is customarily more local than Hull, with insurers throughout the world offering coverage to domestic clients either as a stand-alone Marine product or as an additional service line of business to industrial clients.  

In the current market, transparency is a key element, with full information being requested by insurers - often with little tolerance for inadequate answers - and increased premiums and / or deductibles for underperformance. 

Despite intense competition in this segment of marine insurance, most insurers have made substantial profit in 2003 and are still fighting for market share. Such attitude will sooner than later generate premium reductions and / or losses for insurers.
 

War risks

There is a popular view that war-risks insurance is a licence to print money. There have been relatively few high-profile marine losses apart from the 'Limburg' but premiums have risen quite a bit since the 11 September attacks.  

The nature of war-risks cover, however, makes it much harder to take a view on the fundamental profitability of this class of business. There are not so many traditional wars but more undeclared conflicts and at least the perception of a much higher terrorist threat.  

Although there are a run of regular losses from conflicts around the world and the occasional encounter between a ship and mines from either the second world war, the long running conflict in Sri Lanka or in other trouble spots.  

The biggest recent marine war-risks loss was not the terrorist attack that rendered the tanker 'Limburg' a constructive total loss, but a $125m claim arising from attacks on dredgers working in Indonesian waters.  

Carnival's latest cruiseship, the 2,620-passenger 'Queen Mary 2', will have war-risks cover equivalent to the $800m value of the hull. It will also have additional protection-and-indemnity war-risk cover of $400m on top.  

The Lloyd's underwriters who lead the P&I clubs war-risk programme are the same as those who write hull war risks so the aggregate risk on this single ship runs to $1.2bn, a figure that challenges the capacity of the war market.  

Marine war risks underwriters also write aviation and energy war risks so there is a single market in this class of business. A successful terrorist attack on such a ship would wipe out the total war-market's premium income for many years. 

War-risks cover has traditionally been limited to mobile property such as ships, aircraft and jack-up rigs that can flee a trouble-spot if necessary but there is now a limited market for cover for fixed objects such as offshore platforms and port installations.  

North Sea platforms generally have terrorist but not war cover, although some oil-and-gas installations in the Middle East have war cover.  

London war underwriters are planning to develop a new wording to match the recently introduced revision to the International Hull Clauses.  

The idea is to match the wordings so that risks excluded by the latter are given back in the same terms to avoid potential gaps and disputes. Revising the war clauses is, however, seen as a much simpler task than for the hull clauses.  

London also has a War Risks Rating Committee that publishes a tariff of minimum rates for both marine and aviation. However, these rates apply to cargo rather than ship or aircraft hulls.  

It should be noted that the French Marine Insurance market has pooled a significant underwriting capacity through the G.A.R.E.X. which is able to offer alternative coverage to the London market.
 

The P&I Clubs (Protection & Indemnity)

Since 1994/1995, members of the International Group of P&I Club have not seen a surplus. Nine of the 13 Clubs of the International Group announced a double-digit increase in rates in order to consolidate their reserves and to be able to face the growing trend towards catastrophes in the future. 

The Clubs are extremely conscious about the effect of a catastrophic disaster occurring to a large cruise ship or tanker, which would place their capacity (and that of their re-insurers) under pressure. There is a potential risk of conflict between the demand for capacity and the available supply on the insurance and re-insurance markets. 

The Athens Convention on passenger indemnity in the case of disaster is a serious cause of concern for the Clubs. Cruise ships only account for 1% of the world tonnage (dwt) but the owners and managers of the Clubs are preoccupied by the cost of claims which would result from a new 'Titanic' which would sink the capacity of clubs to underwrite all the other owners. 

These fears are reinforced with the coming into force of the Athens Convention protocol, which has increased the level of indemnity to 400 000 SDR ($ 570 000) per passenger. The whole market from now on living under the threat of a $ 1.75 billion disaster, if the largest cruiseship was lost with all the passengers on board.
 

2004: a critical year

Dans l'int'r't des armateurs, les assureurs doivent prouver qu'ils ont tir' les le'ons du pass' et analys' les raisons des pertes qui ont affect' lourdement leur industrie (6 milliards $ de pertes en 6 ans). La performance des compagnies et des P&I Clubs d'pend d'sormais de leur aptitude ' poursuivre plus avant une politique attentive de tarification et simultan'ment de s'lection accrue des risques, tout en consolidant leurs parts de march'.  

Contrairement ' l'ann'e 2003 durant laquelle peu d''v'nements majeurs se sont produits, l'ann'e 2004 semble d'buter plus difficilement avec notamment les sinistres ayant affect' le vraquier 'Rocknes' (18 morts) en Norv'ge et le navire de croisi're en construction en Allemagne 'Pride of America', d'une valeur de 380 millions $. 

La pr'servation de la ressource et des r'serves des assureurs maritimes constituera un facteur d'terminant dans leur capacit' ' faire face aux 'v'nements majeurs et ' r'pondre ' la demande. 

Les assur's - tant les armateurs que les industriels - ont besoin d'un march' stable et suffisamment profitable, faute de quoi l'assurance maritime ne sera plus en mesure d'attirer les capitaux n'cessaires, et les hausses excessives de primes constat'es au milieu des ann'es 90 risqueraient de se reproduire, ' un moment o' les marges de nos clients pourraient ' nouveau se r'duire ! 

For the sake of owners, insurers must show that they have learnt the lessons of the past and analysed the reasons for the losses, which have badly hit the industry. From now on the success of companies and P&I Clubs depends on their ability to take a keener interest in the setting of premiums and at the same time a more attentive selection to risks, while struggling for their market share.

Unlike 2003, when very few major events troubled the picture, the year 2004 seems to have started with bigger problems, as we have already had claims affecting the bulk carrier 'Rocknes' (18 killed) in Norway and the cruise ship under construction in Germany, the 'Pride of America', with a value of $380 million.

Being able to maintain their funding and reserves will be a critical factor for marine insurers in determining their capacity to handle major disasters and to respond to the market evolution.

Those insured - as much owners as industry - need to have a stable and sufficiently profitable market, without which marine insurance will not be able to attract the necessary capital, and the excessive increases in premiums which were seen in the 1990's, risks happening again, at a time when clients' profits could again get reduced.

Cap-Marine undertakes to find the best solutions
for its clients within the international market.
 



Shipping and Shipbuilding Markets in 2003

I N D E X

›››File
FROM THE HOME PAGE
Solinas chiede al governo di evitare che le nuove norme UE sulle emissioni abbiano un impatto negativo sui collegamenti con la Sardegna
Cagliari
Il rischio è un aumento delle tariffe dei trasporti marittimi e una diminuzione del numero di servizi
Il prossimo anno Ocean Alliance manterrà invariati gli scali ai porti italiani
Pechino
Tre servizi toccheranno Genova. Una linea per ciascuno dei porti di La Spezia, Livorno e Trieste
Intercargo, per la decarbonizzazione dello shipping è indispensabile assicurare la disponibilità di combustibili verdi
Londra
L'associazione evidenzia la necessità di garantire anche la rete di infrastrutture per la fornitura di questi fuel
CMA CGM compra i container terminal nel porto di New York della GCT
New York
Alla società americana rimangono le attività terminalistiche nel porto canadese di Vancouver
In Germania è attesa una ripresa della crescita del trasporto marittimo e ferroviario solo nel 2024
Colonia
Nel 2023 è prevista una stagnazione dell'attività
UNIPORT sottopone alla politica le questioni ritenute essenziali per lo sviluppo della portualità
Roma
Tra i temi evidenziati, quelli del lavoro portuale e delle concessioni
AGCM, il processo di selezione dei concessionari portuali non dovrebbe prendere le mosse esclusivamente dall'istanza del soggetto interessato
Roma
Illustrate le considerazioni in base alle quali è stata respinta la richiesta di Caronte & Tourist di realizzare un sistema di approdo per la rotta Reggio Calabria-Messina
A Venezia le navi da crociera di lusso di piccola dimensione approderanno al terminal di Fusina
Venezia
Accordo tra Venice Ro-Port Mos e Venezia Terminal Passeggeri
Trecentomila euro di multa a Chantier Naval de Marseille (San Giorgio del Porto) per violazioni ambientali
Marsiglia
Denuncia presentata da due associazioni ambientaliste
Attivato il nuovo corridoio ferroviario merci fra Turchia e Uzbekistan
Tashkent
Attraversa i territori di Iran e Turkmenistan
La società ferroviaria merci austriaca RCG istituisce una propria filiale in Cina
Vienna
L'azienda gestisce circa 600 treni all'anno lungo la Nuova Via della Seta
ESPO, l'applicazione dell'EU ETS al trasporto marittimo deve essere monitorata da subito
Bruxelles
Ryckbost: il dirottamento di navi verso porti extra-UE e il trasferimento modale verso la strada devono essere visti come fallimenti
Il governo di Podgorica punterebbe ad una fusione tra Luka Bar e Port of Adria
Podgorica
La società che gestisce il porto di Bar ha evidenziato più volte la necessità di riappropriarsi delle aree gestite dal gruppo turco GPH
Approvato il progetto di costruzione del nuovo container terminal di TIL/MSC nel porto di Valencia
Valencia
L'investimento complessivo darà di quasi 1,6 miliardi di euro
CER, ERFA, UIP, UNIFE e UIRR esortano l'UE a porre le condizioni per la crescita del trasporto ferroviario delle merci
Bruxelles
Invito ai ministri dei Trasporti dell'Unione Europea a far proprie le ambizioni espresse dalla Commissione
SEA Europe plaude all'accordo preliminare per destinare parte delle entrate dell'EU ETS a progetti marittimi
Bruxelles
Tytgat: contribuirà ad accelerare l'innovazione e a potenziare l'applicazione di carburanti e tecnologie più sostenibili
Porto di Gioia Tauro, riduzione delle tasse d'ancoraggio per promuovere i traffici
Gioia Tauro
Destinata a tale scopo la somma di un milione di euro
Apprezzamento di ESPO per l'ampliamento dei criteri per individuare i porti inclusi nella rete globale TEN-T
Bruxelles
Il testo concordato dal Consiglio europeo tiene conto del contributo del porto alla diversificazione degli approvvigionamenti energetici dell'UE e all'accelerazione della diffusione delle energie rinnovabili
Ad ottobre il traffico delle merci nel porto di Ravenna è diminuito del -5,9%
Ravenna
Atteso un calo del -7,0% a novembre
MSC attiverà un nuovo servizio di linea diretto tra India e Mediterraneo occidentale
Ginevra
In Italia scalerà i porti di Genova, Salerno e Gioia Tauro
Alessandra Orsero è stata eletta presidente di Confetra Liguria
Genova
È vice presidente di Isomar e di Spediporto
Accademia Italiana della Marina Mercantile e Fincantieri avviano percorsi di formazione continua
Genova
Un programma è stato studiato specificamente per il personale tecnico del polo di Sestri Ponente
Progetto di Fedespedi e Accudire per sperimentare la digitalizzazione della CMR
Milano
Calamandrei: auspichiamo che il parlamento ratifichi, nel minor tempo possibile, il protocollo alla Convenzione CMR
Accordo tra Assologistica e Assiterminal per iniziative volte allo sviluppo del settore logistico
Milano
È incentrato su ntermodalità, modernizzazione dei contratti, digitalizzazione, formazione e sostenibilità
Cepsa investirà tre miliardi di euro per la produzione di idrogeno verde in Andalusia
Madrid
Verrà utilizzato anche per la decarbonizzazione dello shipping attraverso i porti di Algeciras e Huelva
Sbarcato a Savona un carico di grano proveniente dall'Ucraina
Savona
È il primo a giungere in Liguria dall'inizio del conflitto
I porti turchi chiuderanno il 2022 con un'ulteriore crescita del traffico delle merci
Ankara
Atteso un totale di 545 milioni di tonnellate rispetto ai 526 milioni dello scorso anno
Gara per la vendita della terza nave da crociera ordinata da Swan Hellenic a Helsinki Shipyard
Helsinki
È lunga 125,0 metri e larga 24,3 metri
Partnership della giapponese NYK e dell'indonesiana PIS incentrata sul trasporto marittimo di GNL
Tokyo
L'intesa include altri segmenti d'attività, tra cui le rinfuse petrolifere e le FSRU
Federlogistica, giù le mani del Ministero dei Beni culturali dalla blue economy
Roma
Merlo: non possono non generare grande preoccupazione le recenti dichiarazioni del sottosegretario Sgarbi
Aumento dei costi e concomitante riduzione dei traffici pongono sotto pressione i terminalisti portuali italiani
SAILING LIST
Visual Sailing List
Departure ports
Arrival ports by:
- alphabetical order
- country
- geographical areas
Dal porto di Rijeka è partito il primo servizio ferroviario regolare per il mercato austriaco
Rijeka
Avvio del treno blocco dall'Adriatic Gate Container Terminal
Nel terzo trimestre l'indice del fatturato dei servizi di trasporto e magazzinaggio ha registrato una crescita congiunturale del +3,9%
Roma
La variazione tendenziale è del +19,9%
Il Propeller Club di Salerno ha sviscerato le problematiche e le opportunità offerte dal cold ironing
Salerno
Il PNRR destina 700 milioni a 34 porti per l'elettrificazione delle banchine
Lloyd's Register ha ottenuto l'autorizzazione ad ispezionare il naviglio italiano adibito a viaggi nazionali
Londra
Il gruppo britannico potrà agire in qualità di ente tecnico ed organismo tecnico riconosciuto
Il BIMCO prevede che il trend di indebolimento del mercato dello shipping containerizzato si protrarrà nel 2023 e nel 2024
Bagsværd
I carrier, pur di riempire le navi, potrebbero innescare una spirale di discesa dei noli
Hupac incrementerà la frequenza del servizio intermodale Rotterdam-Pordenone
Chiasso
Salirà da tre a cinque rotazioni a settimana
Assarmatori, le tempistiche di applicazione dell'ETS per il trasporto marittimo, in particolare per le Autostrade del Mare, e per il trasporto stradale devono essere allineate
Roma
Messina: è necessario prevenire pericolosi, e potenzialmente irreversibili, fenomeni di trasferimento modale
PORTS
Italian Ports:
Ancona Genoa Ravenna
Augusta Gioia Tauro Salerno
Bari La Spezia Savona
Brindisi Leghorn Taranto
Cagliari Naples Trapani
Carrara Palermo Trieste
Civitavecchia Piombino Venice
Italian Interports: list World Ports: map
DATABASE
ShipownersShipbuilding and Shiprepairing Yards
ForwardersShip Suppliers
Shipping AgentsTruckers
MEETINGS
Genova, workshop “Nuove energie ai porti”
Genova
Si terrà venerdì a Palazzo San Giorgio
Interporto di Nola, convegno su ZES e logistica
Nola
Si terrà il 3 novembre
››› Meetings File
PRESS REVIEW
Korean shipbuilders demand 20% price cut in steel plates from steelmakers
(Pulse by Maeil Business News Korea)
S. Korean shipyards rank 2nd in new global orders in Nov.
(YONHAP News Agency)
››› Press Review File
FORUM of Shipping
and Logistics
Relazione del presidente Daniele Rossi
Napoli, 30 settembre 2020
››› File
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Editor in chief: Bruno Bellio
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